I.W. Burnham II, a Baron of Wall Street, Is Dead at 93

By KENNETH N. GILPIN

Published: June 29, 2002

Correction Appended

I. W. Burnham II, a financier whose surname has been on the front door of a Wall Street firm virtually since the depths of the Depression, died on Monday after boating near Norfolk, Va. He was 93 and lived in Manhattan.

The cause was a heart attack, said a granddaughter, Debra Burnham Hyman.

Burnham & Company, the firm Mr. Burnham founded in 1935 with a $100,000 loan from his grandfather, grew into Drexel Burnham Lambert, which for a time in the 1980's was one of the biggest success stories in the history of the securities industry.

But the heady days turned infamous, and the firm was fined $650 million in 1990 for securities fraud and went bankrupt, symbolized by Michael R. Milken, the star employee whose X-shaped trading desk was the nexus of the firm's dazzling triumphs. Mr. Milken, who revolutionized the use of high-yield bonds as a financing tool for billion-dollar hostile takeovers, went to jail after pleading guilty to insider trading.

Mr. Burnham, who had resigned as chairman of Drexel Burnham Lambert in 1980 and severed most of his ties with the firm, was never implicated in the scandal or blamed for Drexel's demise. But he suffered.

''His name was in the firm, and the firm was a major part of our business and social lives,'' said Robert E. Linton, who succeeded Mr. Burnham as chairman and worked at the firm for nearly 40 years until he retired in 1985. ''It was a very difficult thing for him,'' Mr. Linton added.

The son of a physician and the grandson of the founder of the distiller I. W. Harper, Isaac Wolf Burnham II was born in Baltimore.

His grandfather, who believed his heirs should work for a living, stipulated in his will that the money he lent his grandson in 1935 be repaid. It was.

When he was 15, Mr. Burnham contracted typhoid fever and gained about 50 pounds. At the time, a popular remedy for surviving the disease was eating a diet heavy on fatty foods. Along with the added weight, Mr. Burnham acquired ''Tubby'' as a nickname. He recovered from typhoid and lost the weight, but the nickname stayed the rest of his life.

Along the way, he acquired dozens of friends, many of whom would become household names themselves. In 1959, for instance, Mr. Burnham's firm hired a young Sanford I. Weill, now the chairman and chief executive of Citigroup, as a stockbroker.

Though Mr. Burnham was always a hard-nosed businessman, Mr. Weill and others remembered him as a decidedly paternalistic employer. ''To my knowledge, he never laid off an employee from when the firm was founded in 1935 because business was slow,'' Mr. Linton said.

Mr. Burnham remained devoted to his employees long after they had moved on. It was a feeling that was reciprocated.

Abby Joseph Cohen, the Goldman, Sachs market strategist, spent the 1980's as a research analyst at Drexel Burnham Lambert. Ms. Cohen, who has a collection of what she called ''love notes'' Mr. Burnham sent to her over the years, most recently a few months ago, said: ''For me, he represented what this industry could be all about: integrity, focusing on the client and having investment professionals do their best possible work.''

Burnham & Company was a small brokerage house for its first 35 years. By 1971, the firm had 42 partners and capital of $40 million. Mr. Burnham had greater ambitions.

To become a force in the business, Burnham needed to acquire or merge with a so-called major bracket firm, an investment bank with the power to underwrite stocks and bonds. Mr. Burnham identified Drexel Firestone, an old-line house based in Philadelphia, as his ticket to greater glory.

In keeping with the diplomacy of the day, Mr. Burnham approached Gustave Levy, head of Goldman, Sachs, and Robert Baldwin, chairman of Morgan Stanley, about the proposed deal. Both men said they would support a merger but insisted that the white-shoe Drexel name had to come first. Mr. Burnham agreed.

''If I had called it Burnham Drexel, we'd still be a submajor'' firm, Mr. Burnham told Connie Bruck, whose book ''The Predators' Ball'' chronicled the story of Drexel Burnham Lambert and the rise of the junk bond kings.

''I remember I told my mother about it and she said, 'How can you? The firm has been Burnham since 1935,' '' Mr. Burnham continued. ''I said: 'Mother, I want this. It will be worth millions to us.' ''

That proved to be an understatement. Within 15 years after the 1973 merger, Drexel Burnham was at the top of Wall Street. In 1976, the firm merged with Banque Lambert, a Belgian investment bank.

But the firm might not have made it there if Mr. Burnham had not persuaded Mr. Milken, who was trading high-yield bonds in a corner of Drexel's Philadelphia trading floor, to stay at the firm instead of returning to the Wharton School to teach, as he planned.

Asked why he was unhappy, Mr. Milken said Drexel would not provide adequate capital to finance his trading operation.

Mr. Burnham quadrupled his position, to $2 million. That year Mr. Milken made the firm $2 million, according to Ms. Bruck. The next year Mr. Burnham doubled the size of the position, and Mr. Milken doubled the size of his group's profit.

In 1977, Mr. Burnham stepped down as chief executive to take a post with the Securities Industry Association. He remained chairman of Drexel Burnham Lambert until 1982 and chairman of the Drexel Burnham Lambert Group Inc., the holding company, until 1984.

Despite Mr. Milken's success, Mr. Burnham warned against becoming too reliant on junk bonds for revenue and fought with Mr. Milken when he said he wanted to move his operations to Los Angeles.

In 1989, Mr. Burnham and his son, Jon, founded Burnham Securities and Burnham Asset Management, and he bought the Burnham Fund, a growth and income fund, back from Drexel.

In addition to his son, who lives in Scarsdale, N.Y., Mr. Burnham is survived by a daughter, Wendy Burnham Morris of Manhattan; seven grandchildren; and nine great-grandchildren. Mr. Burnham's wife, Lawrie Weil Burnham, died in 1997.

With Wall Street struggling through a very tough year, Mr. Burnham chose recently to offer some words of encouragement.

In a June 17 memorandum to Burnham Securities employees, Mr. Burnham said he had been asked to write ''to cheer everybody up.''

''I guess it is logical to expect that anyone who is 93 years old and has seen as much as I have is more likely to be less depressed than others,'' he wrote. ''I have been cautious and I still am, but there are lots of stocks around that are starting to look very cheap to me. These will create opportunities for our clients and ourselves. So, it is time to cheer up and look for the bargains.''

Photo: I.W. Burnham II, whose firm began with a loan from his grandfather. (Fred R. Conrad/The New York Times)

Correction: July 5, 2002, Friday An obituary on Saturday of the financier I. W. Burnham II, who founded a firm that grew into Drexel Burnham Lambert, misstated the charges to which Michael R. Milken, the firm's star bond trader, pleaded guilty in 1990. They were securities fraud and other violations, not insider trading.